British Airways is preparing to cut almost 30% of its 42,000 workforce as the coronavirus crisis continues to batter the aviation industry, leaving airlines’ future planning in tatters as they attempt to grapple with the Covid-19 pandemic. IAG, the airline’s parent company, warned that a return to 2019 passenger levels would take “several years” and announced plans to cut up to 12,000 jobs.

In a letter to BA staff, chief executive Alex Cruz said that “the outlook for the aviation sector has worsened further” in the past few weeks, adding: “We must take action now.”

Cruz told staff “There is no government bailout standing by for BA and we cannot expect the taxpayer to offset salaries indefinitely. Any money we borrow now will only be short-term and will not address the longer-term challenges we face. The scale of this challenge requires substantial change so we are in a competitive and resilient position, not just to address the immediate Covid-19 pandemic, but also to withstand any longer-term reductions in customer demand, economic shocks or other events that could affect us”.

While the Anglo-Spanish owned company made a healthy profit last year, BA is making the decision amid indications that air travel demand will likely not recover for a lengthier period of time than anyone could have ever have expected in the early days and weeks of the Covid-19 outbreak.

In a similar move, SAS (Scandinavian airlines) will permanently cut around 50% of its workforce — up to 5,000 full-time positions — as it warned it would take “some years” for its business to go back to normal.

Economic disparities between countries, and a difference in their priorities as they grapple Covid-19, have already created an unlevel playing field for the airline going forward. While nations like Australia, Singapore, Finland, Hong Kong have already allocated financial aid to save their aviation industries, it’s becoming very clear that not all countries will, and as a result, we’ll witness a lot of airline casualties

Government decisions could ultimately determine whether the airlines that existed prior to Covid-19 are part of our flying future once we are out of the other side this pandemic.

One of the world’s largest airline groups, the Lufthansa Group, is in talks for a $10bn government bailout. Brussels Airlines is currently in talks with the Belgian government over state support for the airline, which says it has only enough resources to last until the end of May. It is reported to be asking for €290mn. Carsten Spohr, the CEO of the group has written to Belgian prime minister Sophie Wilmès to assure her than his group has no intention of a future without the Brussels Airlines brand, amid speculation that consolidating weaker members of the Lufthansa group may be part of the airlines’ coronavirus impact mitigation strategy. Lufthansa has over time invested some €400mn in the company, creating more than 100 new jobs and doubling the number of passengers carried to more than 10mn a year.

Airbus has posted a 49% slump in first-quarter adjusted operating profit to 281mn euros ($304.7mn) as revenue dropped 15% to 10.631bn euros ($11.56bn) amid the "gravest crisis the aerospace industry has ever known", said Airbus chief executive Guillaume Faury. Airbus also reported a negative cashflow of 8.03bn euros ($8.73bn), including a previously published record fine of 3.6bn euros ($3.91bn) to settle bribery and corruption probe.

"The crisis is really unprecedented," Faury told us on an analyst call this week. "It's hitting all regions of the globe and all industries at the same time so the role of governments is obviously key. One of the major risks for us is suppliers going bust."

Meanwhile in the United States, Boeing said on Wednesday it plans a 10% staff reduction — more than 14,000 jobs — as the continued grounding of its signature jet combined with a global halt in air travel sapped billions from its once-profitable commercial jet division.

The company, which reported a loss of $1.7bn, employs more than 150,000 people globally and said it plans to cut approximately 10% of its total workforce.

*The author is an aviation analyst.


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